Have you ever wondered what babies have to do with retirement planning or even mortgages? Surprisingly, more than you might imagine. First off, once the idea of starting a family takes root in a young couple’s psyche, things change dramatically. Smart couples plan for unintended consequences such as the mother not wanting to return to work, the need for day care if she does, and the possibility that the bank will turn you down for a new home loan because you need a bigger place for the family. Wait. Is that last one even legal?
Last week, Tara Siegel Bernard, personal finance columnist for the New York Times posted an interesting thought in her column “Making the Most of Your Money.” Can banks turn you down for a mortgage if they know you plan on having a baby? Or can they claim, after you have signed the papers, that you lied when asked about potential income interruptions, a sly way of asking about pregnancy without asking about pregnancy.
We all know that banks have tightened their collective belts in order to protect the loans they make. In the old days—just several short years ago—the appearance of the ability to pay was all that was needed to get a mortgage worth hundreds of thousands of dollars. But can they refuse to lend you money on the basis of your plans to begin a family?
Businesses have often struggled with the concept of maternity leave. The smaller the firm, the more likely a pregnancy will impact the workplace. Pamela Ryckmanalso writing in the New York Times: “Even employers who want to be fair and compassionate can suffer anxiety over the potential loss of a top performer or even an average worker trained in an essential role.” Often disability insurance is acquired, sick days and vacation are used to cover lost income but admittedly, both the business and the new mother know, there is no guarantee that once the baby arrives, they will return to work.
While businesses may take a very proactive approach and hope for the best, banks don’t have that luxury. Among the business suggestions listed in Ms. Rykman’s article, the ability to plan for a pregnancy can make the whole process much easier. Cali Williams Yost, chief executive of the Flex&Strategy Group, a consulting firm in Madison, New Jersey, was quoted as saying: “Of all the work-life challenges business owners face, maternity leave should be the easiest because you can plan for it. But you need to encourage employees to come to you freely and with a problem-solving attitude.”
